Compliance and Enforcement Bulletin – Issue 4

Telecommunications consumer protection, compliance and enforcement bulletin
Issue 4, March 2011

Welcome to the fourth edition of the Telecommunications consumer protection compliance and enforcement bulletin.

This edition of the bulletin highlights the main areas of consumer complaints for the quarter ending 31 December 2010. The bulletin also reports on the ACMA's telecommunications compliance and enforcement activities for the quarter ending 31 March 2011.

When undertaking its compliance and enforcement function, especially for potentially systemic issues, the ACMA considers information from a number of sources, especially the complaints data provided by the Telecommunications Industry Ombudsman (TIO). However, the ACMA also draws on information provided by members of its Consumer Consultative Forum, individual consumers, media reports and information provided by telecommunications service providers.

TIO data on consumer complaints

At present, the TIO's complaints data is the most robust, empirical source of information on consumer complaints in the telecommunications sector. It also allows time-series analysis.

Each complaint made to the TIO can generate multiple 'complaint issues'. For example, a single consumer complaint might raise issues of both billing and complaint-handling. The December quarter saw an increase in both the number of complaints and the number of complaint issues recorded.

The following are some of the trends that emerged from TIO data for the quarter ending 31 December 2010.

• Overall, complaints to the TIO increased by 7 per cent from 46,512 in the September 2010 quarter to 49,894 in the December 2010 quarter.
• These complaints generated a 13 per cent increase in complaint issues.
• As shown in Chart 1 below, complaint issues for all three service types have increased in the December quarter with internet services up 10 per cent, landline up 12 per cent and mobile services up 14 per cent. This is the third consecutive increase for mobile services complaint issues.
• The increase for mobile service complaint issues can be attributed mainly to complaints about Vodafone Hutchison Australia (VHA) which contributed 41 per cent of these issues. VHA experienced significant disruptions to its network and customer service systems during the December quarter.
• There has been a significant rise in complaints about faults across all services— internet services are up 23 per cent, landline up 22 per cent and mobile services up 41 per cent.
• There has been a further increase in complaint-handling and customer service complaint issues for mobile services. Complaint-handling issues up by 30 per cent over the previous quarter and customer service complaint issues up by 18 per cent in the same period.
• The decline in Mobile Premium Services Code (MPS Code) complaints has continued but appears to be levelling out after the initial fall in March 2009 (see Chart 2).

The following charts and tables assist in understanding the emerging complaint issue trends.

Chart 1 TIO complaint issues

Chart 1 shows that complaint issues for the three service types increased in the December quarter with internet services up 10 per cent, landline up 12 per cent and mobile services up 14 per cent. The ACMA commented on this concerning upward trend in the last bulletin.

Table 1 TIO complaint issues by service over the last two years—quarter

Table 1 shows the number of complaint issues for each major service category—internet, landline and mobiles—which increased from the June 2008 quarter to the September 2009 quarter. After this period, the statistics show a gradual decline in the number of complaint issues over three quarters. However, complaint issues increased by 16 per cent in the September 2010 quarter and a further 13 per cent in the December 2010 quarter.

Chart 2 TIO complaint issues—Mobile premium services 

Chart 2 shows that the number of complaints about mobile premium services fell by four per cent in the December 2010 quarter. The continuing downward trend in MPS complaints is encouraging and reflects the success of MPS Code and associated service provider rules.

Chart 3 TIO complaint issues—quarterly 

Chart 3 shows an increase in complaint issues in all main subject matter categories except billing and payments and transfers.

The increases of 28 per cent for complaint handling and 19 per cent for customer service in the December quarter are particularly disappointing to the ACMA, given its ongoing Reconnecting the Customer public inquiry into customer service and complaints-handling.

Chart 4 Number of complaint issues per Top 9 providers 

* Data for iiNet December quarter includes AAPT's residential customers which iiNet took over from October 2010. This data is not comparable with prior quarters.

Chart 4 depicts complaint issues for the Top 9 providers. (Since the previous bulletin, the market has consolidated).

This chart shows that TIO complaint issues have increased since the September quarter for five of the top providers (Telstra, VHA, Crazy John's, Dodo and TPG/Soul) with complaint issues for VHA rising by 32 per cent in the December quarter.

While a portion of VHA's most recent increase is attributable to Vodafone's network issues during the quarter, and publicity associated with the 'Vodafail' website and report (discussed below), it is disappointing that this is the fourth consecutive quarter of rising complaint issues for VHA.

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ACMA compliance activities

In response to TIO data and other information it receives, the ACMA undertakes a range of activities to promote compliance with the TCP Code and achieve better outcomes for consumers.

Many of these activities are educational. For example, the ACMA regularly audits the compliance of providers with particular TCP Code obligations to identify non-compliance and then works with them to address systemic issues.

This quarter, the ACMA's other activities have included investigating specific complaints referred by the TIO and consumers; continuing the work of the Reconnecting the Customer public inquiry; and being involved in the current review of the TCP Code.

Mobile Premium Services (MPS) audits and investigations

The ACMA is continuing to audit mobile premium services as part of its ongoing compliance program. Audits examine compliance by content suppliers, aggregators and providers with MPS Code requirements. Potential breaches of the code identified in these audits may lead to formal investigations.

During the March quarter, the ACMA finalised two MPS Code investigations into content suppliers.

• Omnicall National Pty Ltd was found to have breached numerous clauses of the MPS Code relating to sending and advertising its marketing messages. The company advertised a service without stating the content supplier's helpline, which is a breach of clauses 3.1.2(d)(i) and 3.2.4(c). The company also breached clause 4.3.6(b)(i) by failing to include the name of the service in its chat service welcome message, as well as clause 5.1.8 by failing to meet all the requirements relating to responding to an error message.
• FTXT Ltd breached clauses covering the use of the term 'free' in its advertising. It breached clause 5.1.8 by not sending a message which contained specific information in response to an indecipherable or invalid content request sent by a customer. It also breached clauses relating to complaints-handling and helpline requirements (clauses 6.1.1(h) and 6.1.4(b)).

Links to published investigation reports can be found at www.acma.gov.au/WEB/STANDARD/pc=PC_1312.

There are eleven further investigations into potential MPS Code breaches underway. The investigations predominantly concern whether content suppliers met the requirements under the MPS Code relating to advertising, providing information and unsubscribe and opt-out provisions.

Auditing the information available on providers' websites

From December 2010 to February 2011, the ACMA undertook three audits of providers' websites, reviewing the information provided to consumers on broadband, post-paid mobile and prepaid mobile products.

Clause 3.3.3 of the Telecommunications Consumer Protections Code (TCP Code) requires:

A Supplier must ensure that its Customers can view and download all relevant terms and conditions of its Telecommunications Services from a website and that the website is accessible.

The audits followed continuing high levels of complaints about point-of-sale information and complaints from customers that their bills were different from what they had expected. These issues have emerged as an underlying cause of complaints during the ACMA's Reconnecting the Customer public inquiry.

The audits found a high level of compliance with the existing rules. Providers promptly remedied non-compliance when it was identified and drawn to their attention.

While there are high levels of compliance with clause 3.3 of the TCP Code, consumers complain that the information available does not prepare them for the bills they receive. This suggests that website information alone is not enough to educate consumers about the practical workings of their contracts and billing arrangements.

The outcome of the audits has informed the ACMA's input into the current review of the TCP Code and the recommendations of the public inquiry.

Website information on broadband products

Twenty-five providers, including all the major providers, were audited across the industry for website information on broadband products.

Key information about broadband products was found within one click of the main product page in most cases. Peak and off-peak time limits typically apply to all internet plans except mobile broadband products. All but one of the providers gave clear information on time limits. All but two providers included information on the product page about what happens if a data limit is exceeded. The majority of providers gave information on service connection fees and termination fees on the main product page.

While most information could be found within one click of the main product page, the ACMA is concerned that, in a number of instances, important information was only available in the standard form of agreement (SFOA) or three clicks from the main product page. For example, termination fees for four providers are only explained in the SFOA. Seven providers located their SFOAs three clicks away from the main product page and often the SFOA was located under a 'legal' link. This may not be an intuitive location for some consumers.

The ACMA contacted two of the audited providers about the peak and off-peak time information and the excessive length of their SFOAs. As a result, the providers took prompt steps to ensure compliance.

Website information on mobile products

Twenty providers of post-paid mobile products, including all the major providers, were audited across the industry. Generally, it was found that key information about post-paid products was found within one click of the main product page. While information about roaming charges was also readily found for the majority of providers, the level of information provided about credit control and usage-monitoring tools offered by providers was inconsistent. This information was more difficult to find than other product details and in four cases no information was found. Only four providers provided some explanation of potential delays in the updating of usage information provided through tools.

This confirmed the ACMA's view—expressed to Communications Alliance (CA) in advance of the TCP Code review—that providers need to develop separate brochures or website material focused on the potential costs of roaming.

The ACMA contacted five of the audited providers about the availability of website information or their unclear disclaimers. Four made prompt improvements to their websites, and one supplied further information to demonstrate compliance.

The ACMA will report on the outcomes of its pre-paid mobile website audits in the next edition of the bulletin.

Auditing the privacy of billing information

Clause 6.8 of the TCP Code states:

A Supplier must protect the privacy of each Customer's Billing and related personal information.

The Telecommunications Act 1997 also imposes obligations on providers concerning the disclosure and use of information gathered in the course of conducting their businesses.

In October 2010, Telstra announced that certain customer details had inadvertently been disclosed to other customers following a mail-merge error.

In early 2011, media reports suggested that Vodafone had mistakenly disclosed the personal information of its customers¹.

¹ ‘Vodafone denies client data on internet was open to all’, The Australian, 10 January 2011

The Office of the Australian Information Commissioner took the lead in investigating this alleged disclosure. His published report into Vodafone is available on the OAIC website.

The ACMA was concerned that these incidents may have been symptomatic of a broader problem within the industry. The ACMA requested information from the Top 10 providers (based on TIO complaints) on the measures that each has in place to safeguard the personal information of customers, and the adequacy of these measures.

All providers have provided the information which is currently being assessed to determine areas of best practice and those that require clarification or rectification. The ACMA will liaise with the Information Commissioner on its findings.

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Vodafone investigation

As mentioned earlier, the TIO's statistics for the December 2010 quarter show an increase in complaint issues raised by VHA customers. There was also considerable media and internet-based comment alleging problems with various aspects of the Vodafone service. These centred on reliability issues concerning Vodafone's network and delays in responding to complaints.

Concurrently, an individual established a website called 'Vodafail.com' to collect and collate complaints about Vodafone. On 21 January 2011, the same person sent a report titled Vodafone's situation: yesterday, today and tomorrow to the ACMA. A number of issues raised in the report suggested possible non-compliance with the TCP Code.

The allegations raised in this report include:

• reliability issues concerning Vodafone's network, for example, calls not connecting, call dropouts, lack of reception and charges for calls not made
• intermittent outages of the spend management tool—My Vodafone
• concerns about point-of-sale representations and post-sale support by Vodafone retail staff.

In light of the Vodafail.com report, and the emerging complaint statistics, the ACMA wrote to Vodafone in February 2011. Among other things the letter covered Vodafone's compliance with the billing, prices, terms and conditions and credit management obligations in the TCP Code as well as measures to safeguard the personal information of its customers.

The ACMA is continuing to investigate these matters..

Credit handling and customer transfer investigations

The ACMA is investigating two providers who are alleged to have undertaken unauthorised transfers of a significant number of broadband customers.

Clause 8.1.3(d) of the TCP Code states:

A Gaining Supplier must:…

…obtain consent to a Transfer from their Authorised Customer or their Authorised Representative

The investigation is continuing.

Terms and conditions and billing investigations

The ACMA received a complaint alleging that a provider was charging customers an annual service fee for a new service it was offering, unless the customer chose to opt out of that service within a defined period. This raised a potential issue about a detrimental, unilateral variation of contracts.

Clause 5.1.3(d)(ix) of the TCP Code states:

…when assessing a term for unfairness it is relevant to consider:…

(d) …whether the object or effect of the term is to:…

(ix) permit the Supplier to unilaterally amend or vary the characteristics of goods or services, including price, in a Consumer Contract with a Fixed Contract Period without:

(A) at least 21 days Written Notice to the Consumer; and

(B) offering the Consumer the right to terminate the Consumer Contract within 42 days of the date of the notice without incurring charges, other than usage or network access charges to the date the Consumer Contract ends…

The ACMA wrote to the provider seeking further information about its related practices. After receiving information from the provider and the TIO, the ACMA was satisfied that the code had not been breached.

Direct debits investigations

In late August 2010, the TIO referred a provider to the ACMA for further investigation of its direct-debit billing practices.

Clause 6.4.3 of the TCP Code states:

A Supplier must ensure that a Customer can verify that its Direct Debit arrangements are in accordance with their authorisation.

While the provider's stated policies appeared to comply with the TCP Code, complaints to the TIO about direct-debit issues for this provider had been increasing, raising concerns about whether the provider's practices aligned with its policies.

The TIO and the ACMA obtained permission from a number of complainants to gather further information from the provider about the circumstances leading to these complaints. The ACMA is now analysing the information, including the voice recordings of the provider's interaction with the complainants, to determine whether consent was granted for the provider's direct-debiting processes.

Complaint-handling investigations

Following concerns arising from TIO complaint statistics, the ACMA requested one provider to submit detailed quarterly reports against the internal complaint-handling requirements of the TCP Code.

Clause 9.1.8(b) of the TCP Code states:

…to identify recurring or systemic problems and prevent recurrence, Suppliers must:…

…classify and analyse Complaints at least every 3 months

After submitting reports for the past two quarters, the provider has now advised it is no longer a CSP.

The ACMA had previously directed another provider to comply with the TCP Code. That provider is now also required to submit detailed quarterly reports against the complaint-handling requirements of the TCP Code. The ACMA has received one report from the provider, and no significant issues of concern were identified. The ACMA will continue to monitor the provider's complaints processes and figures, and will assess its next quarterly report.

Complaint-handling compliance initiative

The ACMA's complaints-handling compliance initiative is continuing.

As previously reported, the ACMA is gathering information from providers whose complaint-handling and customer service complaints to the TIO increase over consecutive quarters. The information will assist the ACMA in identifying any systemic non-compliance with the complaint-handling provisions of the TCP Code.

The ACMA served a new round of information requests in early December 2010 and has received responses from all 20 providers.

Clause 9.2.5 of the TCP Code states:

Where possible, Suppliers must seek to resolve a Complaint on first contact. Complaints must be finalised within 30 days or as soon as practicable in all the circumstances.

Responses indicate that all providers resolve the majority of their complaints within the 30-day maximum period in clause 9.2.5.

In March 2011, the ACMA issued notices to 13 providers. Three were in the previous round of information-gathering notices so their responses will be closely scrutinised by the ACMA.

Other compliance initiatives

In early 2011, the ACMA took a new initiative designed to foster compliance with the TCP Code by mid-sized telecommunications providers. This education and information outreach initiative involved informal discussions with five mid-sized providers. The result is enhanced mutual understanding of the challenges and importance of compliance with the TCP Code.

The discussions have also helped inform the ACMA's input to the TCP Code review.

Telecommunications Industry Ombudsman (TIO) scheme compliance

Section 128 of the Telecommunications (Consumer Protection and Service Standards) Act 1999, requires all providers of services (including internet services) to residential and small business customers to join the TIO scheme. This is a critically important obligation because it enables individual consumers to have their specific grievances assessed quickly, independently and at no direct cost.

In early 2010, the TIO referred eight companies that had not joined the TIO scheme to the ACMA. Seven have now joined the scheme while the ACMA is continuing to investigate the eighth.

TIO scheme members are also required to comply with TIO determinations under clause 6.1 of the TIO constitution.

In September 2010, the TIO referred a provider to the ACMA for failing to comply with three TIO determinations. The provider went into liquidation, and is currently being wound-up. The TIO has been made aware of the change in the company's status.

In late October 2010, the TIO referred a second provider to the ACMA for failing to comply with three TIO determinations. The ACMA's is investigating.

Inquiries and reviews

Reconnecting the Customer

On 1 June, the ACMA released its Reconnecting the Customer draft public inquiry report into complaints-handling and customer service). Comments on any of the proposals in the report close at 5.00 pm on 15 July 2011 and should be mailed to:

Manager, Public Inquiry Section
Australian Communications and Media Authority
PO Box 13112, Law Courts
Melbourne VIC 8010

or emailed to reconnectingthecustomer@acma.gov.au.

TCP Code and MPS Code reviews

The ACMA is an observer on the TCP Code Review Steering Group which has met twelve times during 2010–11. The six working groups formed to develop the code rules are also meeting regularly.

The current MPS Code, which came into effect on 1 July 2009, included a provision for a review of the code to commence after 1 July 2010. Communications Alliance commenced the review on 5 July 2010.

The ACMA anticipates that consultation drafts of both revised codes will be released to the public in mid-2011 and provided to the ACMA for potential registration during the second half of 2011.

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